The Obama Administration and Congress may be sealing a budget deal in which private medical practices and hospital-owned practices will be paid the same amount for certain health care services rendered to patients. The initiative has been pushed by the the Medicare Payment Advisory Commission (MedPAC) for years. If passed into law, Medicare could save upwards of $30 billion over the next ten years – a savings greater than Medicare raising its eligibility level to age 67.

The fact that hospital-employed providers are paid more by Medicare compared to independent practitioners partially explains the proliferation of mergers and acquisitions in the health care industry. Hospitals are trying to make up for government payer cuts elsewhere, so going on a physician buying spree helps their revenue stream. Doctors are a hospital’s bloodline. The trend has unfortunately labeled private practice as a dying art, since more practices under hospital ownership means less commercial payer clout for solo or small group practitioners.

The New York Times explains how the payment differences currently impact Medicare patients:

Imagine you’re a Medicare patient, and you go to your doctor for an ultrasound of your heart one month. Medicare pays your doctor’s office $189, and you pay about 20 percent of that bill as a co-payment.

Then, the next month, your doctor’s practice has been bought by the local hospital. You go to the same building and get the same test from the same doctor, but suddenly the price has shot up to $453, as has your share of the bill.  

Read more here and here.